Africa’s infrastructure investment rebounds amidst challenges
In the year ending in December 2022, infrastructure investments in low- and middle-income countries resumed, according to the World Bank’s most recent data projection on investments, which was published very recently.
According to the study, commitments for Private Participation in Infrastructure (PPI) across 263 projects were $91.7 billion (Sh12.4 trillion), a 23% increase from 2021. “The total number of projects, however, is still below pre-pandemic levels,” World Bank says.
Despite the fact that the trends point to an overall recovery, the lender claims that investments were unevenly distributed and concentrated in certain areas. For instance, investments in Sub-Saharan Africa fell by 15% from the average over the previous five years.
Nevertheless, the region had the most PPI transactions per country and project over the previous ten years. Around 45 PPP projects are currently being implemented or running in Kenya, six of which are 639 km of roads under the roads annuity and tolling programs.
39 additional projects total 3,034 megawatts of installed capacity for energy generating. Road tolls were initially implemented in the nation in the late 1980s, but they were discontinued in the middle of the 1990s in favor of the Roads Maintenance Levy to combat corruption at toll booths. Currently, the levy costs drivers Sh18 per liter when buying gasoline and diesel, respectively.
The lender points out that in the time under consideration, 30 projects totaling $4.7 billion (Sh639.2 billion) in investment pledges were made to the world’s 18 poorest countries, 18 of which are IDA members.
“This represents more than a 26%t increase in investment levels compared to 2021, but also a 22%t lower investment level than the past five-year average of $6.1 billion (Sh829.6 billion),” a statement by the global lender reads.
The World Bank’s international financial organization IDA provides grants and concessional loans to the world’s poorest developing nations.
Up to 2022, the transport industry continued to outpace other industries in emerging countries’ continuous recovery. With 85 projects totaling $66.2 billion (Sh9 trillion) in PPI investment, transportation accounted for nearly 68% of all 2022 PPI spending.
“This is explained by more investment in roads, which have historically been the largest sub-sector in transport commitments,” the lender says.
With an increase of around 21% and a total of $25.9 billion (Sh3.5 trillion) in PPI investment during the period under review, the energy industry also saw a considerable increase.
As opposed to an average of 63% over the previous five years, investments were increasingly concentrated on environmentally sustainable solutions, with about 85% of new energy projects utilizing renewable energy.
When compared to other regions’ investment levels, Latin America and the Caribbean, East Asia, and the Pacific saw increases in PPI commitments of 16 and 17%, respectively.
